176. The materials used by the Koko Company Division A are currently purchased from outside supplier. Division B is able to supply Division A with 20,000 units at a variable cost of $42 per unit. The normal price that Division B normally sells its units is $53 per unit. What is the range of transfer prices that the two division managers should negotiate?
$53 to $42 per unit.
177. The budget for Department 10 of Plant M for the current month ending March 31 is as follows:
Materials
$208,000
Factory wages
265,000
Supervisory salaries
67,800
Depreciation of plant and equipment
35,000
Power and light
22,500
Insurance and property taxes
15,500
Maintenance
9,700
During March, the costs incurred in Department 10 of Plant M were materials, $204,000; factory wages, $285,000; supervisory salaries, $63,600; depreciation of plant and equipment, $35,000; power and light, $21,360; insurance and property taxes, $14,400; maintenance, $9,456.
(a)
Prepare a budget performance report for the supervisor of Department 10 of Plant M for the month of March.
(b)
Are there any significant variances (greater than 5%) of the budgeted amounts that should be examined by the supervisor?
178. A department store apportions payroll costs on the basis of the number of payroll checks issued. Accounting costs are apportioned on the basis of the number of reports. The payroll costs for the year were $231,000 and the accounting costs for the year totaled $75,500. The departments and the average cost of store equipment and average cost of inventory for each are as follows:
Number ofPayroll Checks
Numberof Reports
Department R
483
70
Department S
1,470
85
Department T
147
345
Determine the amount of (a) payroll cost and (b) accounting cost to be apportioned to each department.
179. A portion of the divisional income statement for the year just ended is presented below in condensed form.
Department F
Net sales
$ 250,000
Cost of goods sold
180,000
Gross profit
$ 70,000
Operating expenses
90,000
Loss from operations
$ (20,000)
The operating expenses of Department F include $45,000 for direct expenses.It is estimated that the discontinuance of Department F would not have affected the sales of the other departments nor have reduced the indirect expenses of the business. Assuming the accuracy of these estimates, determine the effect (increase or decrease and amount) on the income from operations of the business if Department F had been discontinued.
180. Some items are omitted from each of the following condensed divisional income statements of Willis Inc.
Division L
Division M
Division N
Sales
$ (1)
$320,000
$580,000
Cost of goods sold
480,000
120,000
$ (5)
Gross profit
$220,000
$ (3)
$180,000
Operating expenses
95,000
160,000
$ (6)
Income from operations
$ (2)
$ (4)
$ 75,000
(a)
Determine the amount of the missing items, identifying them by number.
(b)
Based on income from operations, which division is the most profitable?
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